Why Google rewards its employees for failing.

Google, the technology behemoth responsible for innovative products such as Gmail, Google Glass and driverless cars, rewards its employees not just for their successes, but also for their failures. According to a FastCompany.com article, Google employees are publicly applauded by their co-workers and supervisors for their failures, and are often rewarded with time off to contemplate what their next project will be.

But Google isn’t the only company that celebrates failure. Supercell, the gaming company behind the popular online game Clash of Titans, celebrates employee failures by cracking open a bottle of champagne. And P&G, the billion-dollar global consumer goods giant, is known for its prestigious “Heroic Failure Award” which is given to employees with the biggest failures. Several other companies reportedly also have their own versions of the award.

But…why on earth would companies known for their successful track records and high rates of innovation actually reward people for failing? Doesn’t that encourage employees to lower their own expectations and, instead, produce mediocre work? Not so, say leaders from Google and many successful companies who encourage their team members to fail. These companies recognize that atychiphobia (the scientific name for “fear of failure”) can be paralyzing and can be a tremendous threat to their competitiveness.

Here are just a few reasons why Google and several other successful companies celebrate failure in their organizations.

Celebrating failure encourages innovation

Google understands that fear of failure is one of the biggest enemies of innovation, and can prevent people from experimenting with new ideas – a critical ingredient necessary for innovation. And considering that Google is in the business of innovation, fear of failure is a huge threat. That’s why the company has worked hard to build a culture where employees aren’t afraid to report their failures to their bosses. Astro Teller, Director of X (formerly “Google X”), is the research division of Google’s parent company Alphabet. Teller believes that celebrating failure actually helps increase employee innovation. In an interview with BBC, Teller said:

“If I make you feel stupid because you tried something new and it didn’t work out, you’re never going to try something new again. But if we can create a culture together where you feel stupid because you haven’t tried something new this week, you’re going to try something new every week.”

And that’s exactly what innovative companies want – team members who innovate by being willing to try new things.

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Celebrating failure helps save time and money

Another benefit of celebrating failure is that it saves time and money by encouraging people to pull the plug on projects when they uncover a fatal flaw. According to Teller, when people are afraid of reporting their failures, instead of pulling the plug early on, they may hold on to their projects for emotional or political reasons, or may even inject more money into a project that is unsustainable. As Teller notes, if you don’t reward failure, people will hang on to a doomed idea for fear of the consequences. And that wastes time and saps an organization’s spirit. In a popular TED Talk, Teller tells his audience that X employees who kill their own ideas are rewarded.

“We work hard at X to make it safe to fail. Teams kill their ideas as soon as the evidence is on the table because they’re rewarded for it. They get applause from their peers. Hugs and high fives from their manager, me in particular. They get promoted for it. We have bonused every single person on teams that ended their projects, from teams as small as two to teams of more than 30.”

Reportedly, Google’s rewards aren’t big enough to encourage people to pull the plugs on their projects indiscriminately, but the rewards aren’t small change either. They’re just the right size to encourage individuals to kill projects with fatal flaws that should no longer be pursued.

Celebrating failure improves efficiency and builds new skillsets

Companies have gotten into the habit of celebrating employees who achieve breakthrough success. And for good reason! When employees succeed at a project, they bring valuable knowledge to the organization. That individual can now teach her co-workers new skillsets, new techniques and new ways of doing things. But when employees fail, they also bring valuable knowledge to the organization. Firstly, along the path to failure, that employee builds valuable new skillsets that can improve her efficiency – even if the overall project wasn’t exactly a success. Secondly, that employee now has valuable, shareable insight into what techniques didn’t work for her particular project. By encouraging employees to highlight their failures (rather than hiding those failures from their co-workers and bosses), team members can hold their heads high, confidently teach others how to avoid similar mistakes, and focus on potentially more efficient ways of solving the problem. That’s why, rather than developing a culture that frowns on failure, companies should learn to celebrate their employees’ failures and learn from them. As Coca-Cola’s Chairman and CEO, Muhtar Kent, notes: Don’t be afraid of making mistakes; just don’t repeat them.

If you’re an entrepreneur, business owner or a member of your company’s leadership team, and you want to supercharge your organization to new levels of innovation, efficiency and learning, perhaps it might be a good idea to take a look at your company culture and find ways to celebrate failure.